AT&T is having the last laugh today, however. The company
reported record smartphone sales for the first quarter. The 5.5 million
smartphones sold during Q1 represented AT&T's third highest total ever for
any quarter and represented a 60 percent growth year-over-year.

Despite the fact that Verizon now has the iPhone 4, AT&T
was still able to activate 3.6 million iPhones during the quarter, with 23
percent of those customers -- 828,000 -- being new customers.

Of AT&T's 68.1 million postpaid customers, 46.2 million
of them are on lucrative smartphone plans

80 percent of smartphone customers or on FamilyTalk or
business discount plans

65 percent of postpaid sales for the Q1 can be attributed to
smartphones

Other areas of AT&T business also saw notable gains with
its Branded Computing Subscribers (aircards, MiFi, tethering, tablets) seeing
an increase of 421,000 to reach a total of 3.4 million. Of the 421,000 adds,
tablets accounted for 322,000.

“We delivered another robust mobile broadband growth quarter
for a very solid start to the year,” said AT&T Chairman and CEO Randall
Stephenson. “We posted double-digit wireless revenue growth, and we set new
first-quarter records in total net adds, connected device net adds and
smartphone sales. Growth in tablets and other branded computing subscribers
also continues to be strong.

“Mobile broadband networks are driving unprecedented growth
and innovation, and AT&T is playing a leading role in bringing these
benefits to customers,” Stephenson continued. “That’s why our agreement to
acquire T-Mobile USA, which we announced in March, is so important. Combined,
the two companies’ spectrum and network assets will allow us to simultaneously
address spectrum issues created by this increased demand and improve customers’
network experience as volumes continue to grow.”